Compact cars to help Mercedes Benz India stay on growth path

Led by its continued product offensive and the response to ‘A Class’ and ‘B Class’ compact cars, the luxury carmaker has exceeded its target for 2013 and is likely to cross 8,500 sales mark, reflecting a growth of over 20%. In 2012, Mercedes had sold 7,138 cars.

MUMBAI: Eberhard Kern, the managing director of Mercedes Benz India, says the strong momentum powered by the luxury carmaker's newly launched compact cars is likely to spillover to 2014. And buoyed by the response, the company is eyeing double-digit growth next year.

Led by its continued product offensive and the response to 'A Class' and 'B Class' compact cars, the luxury carmaker has exceeded its target for 2013 and is likely to cross 8,500 sales mark, reflecting a growth of over 20%. In 2012, Mercedes had sold 7,138 cars.

Not only has Mercedes Benz regained the number 2 slot from BMW India, the company did overtake its Ingolstadt-based luxury car rival Audi in India as the number one company in monthly sales a couple of times over the last few months. Though an annual basis, it still trails behind Audi.

Kern said: "It is a nice side effect that we were number one in sales (for a couple of months) but that was not the ultimate goal, the goal remains to have a profitable and sustainable business. We have had an exciting year, and much better than our planned business, we had supply constraints, which are now getting better, we have already asked for more units."

While Kern is non-committal on targets and number of product launches, ET learns the company is aiming for 15% growth in 2014 and it is eyeing a five-digit mark. The product offensive gets even more aggressive with over 7-8 new models lined up next year, including the all new S class, compact sedan CLA and a compact SUV GLA on the anvil.

The performance is noteworthy, since the overall car market is likely to post a decline of 7-9%, Mercedes Benz India has posted a growth of 32% in the first nine months of 2013 with sales of 6,461 units and is well on its way to close the year with over 20% growth.

Kern say while 2013 was a choppy year, in 2014 he expects the overall car market to come back to 10% growth. "With the low base of luxury cars, we expect the luxury car market to grow faster to about 15%," he added. Though Indian luxury car space is at a very nascent stage with sales of around 30,000 to 31,000 units annually, making up for 1.2% of the overall market, the level of competitive intensity amongst the German rivals is as good as some of the developed markets.

Apart from the overall slowdown in the market, discounts and currency volatility do pose a challenge to the luxury carmakers in India.

Kern does not deny that there are no discounts from Mercedes Benz, barring the offers on the outgoing models, he re-iterates that it is not the company which is offering discount, but it is coming from dealer fraternity "It is not all about volume, we look at sustainable and profitable business, and there are some challenges, which are coming from the exchange rate. There is pressure on increasing prices, but we are doing all we can to absorb," added Kern.